Proposals gone wrong

Whoever suggested that the Camps Aguinaldo and Crame be sold to the private sector in order to raise funds for the modernization of our military should have done his research first.

Just last year, Armed Forces spokesman Brig. Gen. Jose Mabanta, in opposing a resolution filed by Quezon City councilor Godofredo Liban for the transfer of Camp Aguinaldo, the home of the Armed Forces of the Philippines and of the Department of National Defense outside the city, already clarified that the 26.6-hectare core of Aguinaldo was donated by the Ortigas family and cannot be sold.

According to Mabanta, if the property is sold, it means it will no longer be used for military purposes, and would therefore revert back ownership to the Ortigas family.

I remember a conversation we had recently with then Ortigas & Co. head Rex Drilon, now retired, who said that they are proposing to the government that in exchange for the latter agreeing to return portions of Crame and Aguinaldo (eight hectares and 26 hectares, respectively) to the Ortigas family, Ortigas & Co. can develop some projects, including housing facilities, for the military. The only way that these pieces of prime real estate donated by the Ortigas family can be recovered and reverted back to the family is if they cease to be used for military purposes.

There are also reports that other portions of the two camps were likewise donated specifically for military purposes and that in case they are no longer being used for such purposes, then they revert back to the owners.

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This brings us to another ‘brilliant plan’ by our government to improve revenue generation.

Up to now, a proposal by Swiss company SICPA to implement a tax stamp system to improve excise tax collections on cigarettes has been languishing.

The proposal had been getting a lot of bad press. Opposition to it is also growing. The House ways and means committee for one has recommended that the government, particularly the Bureau of Internal Revenue, stop negotiations with SICPA about its proposal.

The local tobacco industry is also against the SICPA proposal. They question SICPA’s justifications for the tax stamp system, including the claim that the country loses up to P10 billion in revenues each year due to the illicit trade of tobacco products. The house committee says such a claim is not verified. It said that in the absence of any validation conducted by the Bureau of Internal Revenue, the National Economic and Development Authority, and the National Tax Research Center on the assumptions used by SICPA on the alleged massive tax leakage and rampant trade of illicit cigarettes, the committee cannot simply assume or accept the existence of a tax leakage or trade on illicit cigarettes that will warrant the investment of P18 billion.

The Philippine Tobacco Institute has also disputed SICPA’s claim that its track and trace system works, saying its SICPATRACE system has been rejected in other countries and so did the World Health Organization Framework Convention on Tobacco Control (WHO FCTC) which said that SICPA’s system does not provide a “track and trace solution.”

We’ve written a lot against the SICPA proposal because anything with an P18-billion price tag and which the public will end up shouldering leaves a bad taste in the mouth.

But then, for the sake of fair play, we believe it is also our duty as journalists to print the other side.

According to SICPA, its proposed security project involves the use of strip stamps in all cigarette and cigar packs and non-intrusive sensors in tobacco factories plus the relay of such information to a centralized Data Management System (DMS) for real-time monitoring and tracking of tobacco production and distribution in the country.

It said this effective monitoring method will enable the Philippine government to assess the exact amount of taxes that tobacco companies are supposed to pay to the BIR, which can run up to tens of billions of pesos yearly.

SICPA projects that through its foolproof tracking technology, the government can raise over P100 billion in just seven years in excise tax revenues from the tobacco companies. Aside from higher excise tax earnings from the tobacco sector, the government will also benefit in the form of corresponding increases in VAT collections, withholding tax and corporate income tax revenues from the capture of previously undeclared, misdeclared or misclassified tobacco products, among others.

In keeping with the mandate of Republic Act No. 9334 or the Tax Code on the 15 percent share of excise tax collections of tobacco-producing provinces, SICPA noted that the higher overall collections by the BIR from the tobacco industry will result to a higher share or more money for beneficiary-localities in tobacco-producing provinces for farm-friendly projects.

These include cooperative projects enhancing the quality of agricultural products, livelihood projects for the development of alternative products for farmers, and agro-industrial projects like postharvest facilities for tobacco growers.

The Philippine Health Insurance Corp. (PhilHealth) and the Department of Health (DOH) will also benefit greatly from this electronic tracking project for tobacco products because of the projected higher contributions to both agencies, which, under RA 9334, are to each get a 2.5 percent share of the incremental increase in excise tax collections from alcohol and tobacco products.

SICPA added that is projection on additional revenues for government were based on a slew of prominent studies on tax leakages in the Philippines and the rest of the world, including a joint report done by the Bill and Melinda Gates Foundation and Bloomberg Philanthropies and two Manila-based studies by Dr. Emilio Antonio Jr. and by Euromonitor.

The Gates and Bloomberg report, for instance, listed the Philippines as No. 6 in the 2007 list of Top 10 countries with the greatest illicit trade of tobacco, estimating the local illicit market at 19.4 percent of legal sales amounting to P18.5 billion during the previous year alone. 

As for claims that its tracking and monitoring project has been a failure in various countries, SICPA stressed that it can rightfully claim that its project is successfully being implemented in Brazil, Malaysia, Turkey and California. 

As for the charge that SICPA failed to comply with all the technical requirements given by the BIR on the project, it said that since this was an unsolicited proposal, it never received a list of technical requirements from the BIR.

So there you go. Will the alleged benefits outway the cost of the project? Is there really a need for it? You decide.

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